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Babson Capital/UNC Charlotte
Economic Forecast
June 4, 2013
The data used in this report comes from the websites for the U.S. Department of Commerce's Bureau of Economic Analysis (www.bea.gov)
and the North Carolina Employment Security Commission (www.ncesc.com) as of April 30,2013. The opinions expressed in this Forecast by
Professor Connaughton (the Babson Capital Professor of Economics at the Belk College of Business) and UNC Charlotte do not necessarily
represent the views of Babson Capital Management LLC or its affiliates.
• For 2012, North Carolina real GSP decreased by 0.1 percent over the 2011
level.
• Eight of the state’s 15 economic sectors experienced modest output increases
during 2012. The sectors with the strongest growth were Business and
Professional Services with a real increase of 4.0 percent; Construction with a
real increase of 2.7 percent; Information with a real increase of 2.4 percent;
Mining with a real increase of 2.4 percent; and Transportation, Warehousing
and Utilities (TWU) with a real increase of 1.7 percent.
• For 2012, North Carolina establishments added 89,900 net additional jobs, an
increase of 2.2 percent.
• For 2013, North Carolina real GSP is forecast to increase by 1.9 percent over
the 2012 level.
• Thirteen of the state’s 15 economic sectors are forecast to experience output
increases during 2013. The sectors with the strongest expected growth are
Business and Professional Services with a projected real increase of 5.8 percent;
Mining with a projected real increase of 3.2 percent; Transportation,
Warehousing and Utilities (TWU) with a projected real increase of 3.1 percent;
and Other Services with a projected real increase of 3.0 percent.
• For 2013, North Carolina establishments are forecast to add 62,200 net
additional jobs, an increase of 1.5 percent.
• For 2014, North Carolina real GSP is forecast to increase by 3.0 percent over
the 2013 level.
• For 2014, North Carolina establishments are forecast to add 90,500 net
additional jobs, an increase of 2.2 percent.
GSP (Gross State Product) is a yardstick that
measures the total output of a state’s economy
for a given year. It is analogous to the U.S.
Gross Domestic Product (GDP).
9.4
8.6
10.5 9.8
Year-End Seasonally Adjusted North Carolina
Unemployment Rates
2010
2011 2012 2013f 2014f
2
4
6
8
10
12
14
8.4
1.9
Annual Growth Rates In Real GSP
-2
2010 2012 2013f 20142011 f
-1
0
1
2
3
3.0
2.2
-0.1
FORECAST HIGHLIGHTS
2.3
North Carolina Gross State Product (GSP) reached a level of $446,095.5
million in 2012. Real (inflation-adjusted) GSP decreased by 0.1 percent
over the 2011 level. This decline in 2012 followed very modest growth in
2011 and results in three years of slow growth since the recovery began.
For 2012, first quarter GSP increased at an annualized real rate of 1.2
percent. During the second quarter, GSP decreased at an annualized real
rate of 1.3 percent. In the third quarter, GSP rebounded and increased at an
annualized real rate of 1.2 percent. In the fourth quarter of 2012, GSP
picked up and recorded an annualized real growth rate of 1.9 percent.
While both the U.S. and state recoveries began in July of 2009, for North
Carolina it has been a weak recovery. For 2012, the U.S. economy
recorded slow real GDP growth of 2.2 percent and was able to avoid a
double-dip recession. However for North Carolina 2012 turned out to be
much weaker than the U.S. The good news is that the strongest growth
quarter was the fourth quarter of the year and this could lead to increased
growth in 2013.
Despite the weak GDP growth in 2012, the state was able to add a
respectable number of jobs during the year. The new benchmarked data
that came out in March indicated that the state added 89,900 jobs during
the year, the best job growth year since 2006 and the second best since
1998. By the end of 2012 the state had replaced 192,100 of the 334,600
jobs lost during the recession. That means that 57.4 percent of the total
jobs lost have been replaced over the last three years. Over the same period
the U.S. economy has replaced 61.6 percent of the 8,722,000 jobs lost.
Despite the job growth in 2012, North Carolina continues to have one of
the highest unemployment rates in the country.
2012 I 2012 II 2012 IVf
4
3
2012 III
1
0
2
Quarterly Growth Rates
in Real GSP
-1.3
1.9
1.2 1.2
2012 GSP
2012 Highlights
Current Dollars
Total Gross Product
Constant (2000 Dollars)
Total Gross Product
Agricultural
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
TWU
Wholesale Trade
Retail Trade
Information
FIRE
B & P
E & H
H & L
Services
Government
446,095.5
387,080.0
3,185.6
132.2
12,689.6
77,966.9
37,358.5
40,608.4
12,973.9
19,132.3
23,286.0
13,853.7
81,810.2
41,576.8
28,766.0
12,001.1
7,549.4
52,156.3
2012 * Percent
Change
1.4
-0.1
-10.3
2.4
2.7
-3.0
-2.3
-3.7
1.7
0.3
0.0
2.4
0.4
4.0
-0.1
1.6
-0.1
-1.2
* millions of dollars
The chart to the left presents the contributions of each major economic
sector to North Carolina’s Gross State Product (GSP). The real
(inflation-adjusted) growth rate for 2012 decreased by 0.1 percent. Real
growth rates for each sector (displayed in black type) are plotted on the
horizontal axis. Projected percentages of GSP contributed by each sector
(displayed in green type) are plotted on the vertical axis. The resulting
rectangles show the weighted importance of each sector’s growth during
2012. All of the sector information presented in the table to the left is
based on the new North American Industry Classification System
(NAICS) definitions.
Eight of the state’s 15 economic sectors experienced modest output
increases during 2012. The sectors with the strongest growth were
Business and Professional Services with a real increase of 4.0 percent;
Construction with a real increase of 2.7 percent; Information with a real
increase of 2.4 percent; Mining with a real increase of 2.4 percent;
Transportation, Warehousing and Utilities (TWU) with a real increase of
1.7 percent; Hospitality and Leisure Services with a real increase of 1.6
percent; Finance, Insurance, and Real Estate (FIRE) with a real increase
of 0.4 percent; and Wholesale Trade with a real increase of 0.3 percent.
Retail Trade output was flat in 2012.
Six sectors experienced output declines during 2012. These sectors were
Agriculture with a decline of 10.3 percent; Nondurable Goods
Manufacturing with a decline of 3.7 percent, Durable Goods
Manufacturing with a decline of 2.3 percent, Government with a decline
of 1.2 percent, Education and Health Services with a decline of 0.1
percent, and Other Services with a decline of 0.1 percent.
2012 GSP SECTOR ANALYSIS
Percent of Total Real GSP
Percent of Real Sector Growth
0.8
Nondurables -3.7
FIRE 0.4
2012 Total Real GSP Growth -0.1%
Agriculture -10.3
Retail Trade 0.0
Construction 2.7
Durables -2.3
TWU 1.7
Other Services -0.1
Wholesale Trade 0.3
0.0
3.4
9.7
10.5
3.3
4.9
6.0
3.1
13.5 Government -1.2
21.1
Information 2.4
B&P Services 4.0
E&H Services -0.1
H&L Services 1.6
10.7
7.4
2.0
3.6
Mining 2.4
North Carolina Gross State Product (GSP) is expected to reach a level of
$461,921.8 million in 2013. Real (inflation-adjusted) GSP is expected to
increase by 1.9 percent over the 2012 level. This growth in 2013 would
follow a modest decline in 2012 GSP and turn around a weak North
Carolina economy.
For 2013 first quarter GSP is expected to increase at an annualized real
rate of 1.7 percent. During the second quarter, GSP is expected to increase
at an annualized real rate of 2.7 percent. In the third quarter, GSP is
expected to record an annualized real growth rate of 2.5 percent. In the
fourth quarter of 2013, GSP is expected to grow at an annualized real rate
of 3.2 percent.
After a disappointing 2012, the state’s economy showed signs of life in the
fourth quarter. In addition, several recent factors suggest that 2013 could
be a breakout year for the North Carolina economy. First, we avoided
going over the “fiscal cliff” on January 1, 2013. While we did not avoid a
tax increase the impact was much less than had we gone over the cliff.
The compromise reached by the Congress and the President resulted in tax
increases on U.S. households of $160 billion in 2013 and sequestration
spending cuts of another $85 billion. This is about half the impact that
going over the cliff would have caused.
Second, and most important, for the first time in five years we are seeing
sustained increases in housing prices. The Case-Shiller Home Price Index
increased by 9.3 percent from February of 2012 to February 2013 for the
20 City Composite. Consistent increases in housing prices will change
consumer psychology toward home purchases and result in increased
demand over the next year. If residential construction picks up as expected
the second half of 2013 could be the first time this recovery actually feels
like a recovery.
2013 I 2013 II 2013 IV
4
3
2013 III
1
0
2
Quarterly Growth Rates
in Forecasted Real GSP
2.7 3.2
2.5
1.7
2013 GSP
2013 Highlights
Current Dollars
Total Gross Product
Constant (2000 Dollars)
Total Gross Product
Agricultural
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
TWU
Wholesale Trade
Retail Trade
Information
FIRE
B & P
E & H
H & L
Services
Government
461,921.8
394,307.3
3,170.2
136.4
12,809.3
78,717.7
37,786.2
40,931.5
13,372.7
19,599.1
23,710.6
14,145.3
83,020.5
43,971.7
29,582.2
12,286.0
7,775.1
52,028.4
2013 * Percent
Change
3.6
1.9
-0.5
3.2
0.9
1.0
1.1
0.8
3.1
2.4
1.8
2.1
1.5
5.8
2.8
2.2
3.0
-0.2
* millions of dollars
The chart to the left presents the projected contributions of each major
economic sector to North Carolina’s Gross State Product (GSP). The real
(inflation-adjusted) growth rate for 2013 is forecast to increase by 1.9
percent. Projected real growth rates for each sector (displayed in black
type) are plotted on the horizontal axis. Projected percentages of GSP
contributed by each sector (displayed in green type) are plotted on the
vertical axis. The resulting rectangles show the expected weighted
importance of each sector’s growth during 2013. All of the sector
information presented in the table to the left is based on the new North
American Industry Classification System (NAICS) definitions.
Thirteen of the state’s 15 economic sectors are forecast to experience
output increases during 2013. The sectors with the strongest expected
growth are Business and Professional Services with a projected real
increase of 5.8 percent; Mining with a projected real increase of 3.2
percent; Transportation, Warehousing and Utilities (TWU) with a
projected real increase of 3.1 percent; Other Services with a projected
real increase of 3.0 percent; Educational and Health Services with a
projected real increase of 2.8 percent; Wholesale Trade with a projected
real increase of 2.4 percent; Hospitality and Leisure Services with a
projected real increase of 2.2 percent; and Information with a projected
real increase of 2.1 percent.
Five sectors are also expected to record increases in 2013 at rates less
than the overall state growth of 1.9 percent. These sectors are Retail
Trade; Finance, Insurance and Real Estate (FIRE); Durable Goods
Manufacturing; Construction; and Nondurable Goods Manufacturing.
Two sectors – Government and Agriculture – are expected to decline in
2013.
2013 GSP SECTOR ANALYSIS
Percent of Total Real GSP
Percent of Real Sector Growth
0.8
Nondurables 0.8
FIRE 1.5
2013 Total Real GSP Growth 1.9%
Agriculture -0.5
Retail Trade 1.8
Construction 0.9
Durables 1.1
TWU 3.1
Other Services 3.0
Wholesale Trade 2.4
0.0
3.4
9.6
10.4
3.2
5.0
6.0
3.1
13.2 Government -0.2
21.1
Information 2.1
B&P
Services 5.8
E&H Services 2.8
H&L Services 2.2
11.2
7.5
2.0
3.6
Mining 3.2
Percent of Sector Employment Growth
Nondurables 1.8
FIRE 1.4
Retail Trade 3.2
Construction -2.0
Durables 2.3
Other Services 1.7
Wholesale
Trade 3.4
0.1
4.2
5.1
4.3
5.9
11.4
3.0
10.6
17.7
Government 0.5
5.1
Information 0.4
B&P Services 3.5
E&H Services 2.7
H&L Services 5.1
13.5
13.8
3.5
1.7
Mining -1.8
2012 Employment Highlights
Total Establishment
Employment
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
Wholesale Trade
Retail Trade
TWU
Information
FIRE
B&P Services
E&H Services
H&L Services
Other Services
Government
4,032.3
5.5
170,1
442.9
235.9
207.0
174.7
458.4
122.5
69.4
204.0
542.8
557.6
426.7
143.0
714.7
Year-End* Percent
Change
2.3
-1.8
-2.0
2.1
2.3
1.8
3.4
3.2
1.7
0.4
1.4
3.5
2.7
5.1
1.7
0.5
*thousands of persons
2012 EMPLOYMENT
SECTOR ANALYSIS
2012 Year-End Employment Trends
Percent of Total Employment
TWU 1.7
The sector employment analysis presented on this page is based on the
new North American Industrial Classification System (NAICS).
Seasonally adjusted nonagricultural employment in North Carolina
reached 4,032,300 persons by December 2012, an increase of 2.3
percent over the employment level in December 2011. The state gained
89,900 net jobs during the year.
Twelve of the state's 14 nonagricultural sectors of the economy
experienced employment increases during 2012. The sectors with the
strongest employment increases in 2012 were Hospitality and Leisure
Services at 5.1 percent; Business and Professional Services at 3.5
percent; and Wholesale Trade at 3.4 percent.
Percent of Sector Employment Growth
Nondurables 0.7
FIRE 0.7
Retail Trade 1.7
Construction 0.9
Durables 2.0
Other Services 1.1
Wholesale Trade 0.9
0.1
4.2
5.1
4.3
5.9
11.4
3.0
10.7
17.7
Government 1.3
5.0
Information 4.4
B&P Services 1.9
E&H Services 1.4
H&L Services 2.8
13.5
13.8
3.5
1.8
Mining -6.1
2013 Employment Highlights
Total Establishment
Employment
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
Wholesale Trade
Retail Trade
TWU
Information
FIRE
B&P Services
E&H Services
H&L Services
Other Services
Government
4,094.5
5.2
171.6
449.1
240.6
208.5
176.4
466.1
122.5
72.5
205.4
553.1
565.3
438.7
144.6
724.2
Year-End* Percent
Change
1.5
-6.1
0.9
1.4
2.0
0.7
0.9
1.7
0.0
4.4
0.7
1.9
1.4
2.8
1.1
1.3
*thousands of persons
2013 EMPLOYMENT
SECTOR ANALYSIS
2013 Year-End Employment Trends
Percent of Total Employment
TWU 0.0
The sector employment analysis presented on this page is based on the
new North American Industrial Classification System (NAICS).
Seasonally adjusted nonagricultural employment in North Carolina is
expected to reach 4,094,500 persons in December 2013, an increase of
1.5 percent over the employment level in December 2012. The state is
expected to gain 62,200 net jobs during the year.
Twelve of the state's 14 nonagricultural sectors of the economy are
expected to experience employment increases during 2013. The sectors
with the strongest employment increases in 2013 are Information at 4.4
percent; Hospitality and Leisure Services at 2.8 percent; and Business
and Professional Services at 1.9 percent.
Gross State Product (GSP) is expected to reach a level of 485,548.5
million in 2014. Real (inflation adjusted) GSP is expected to increase by
3.0 percent over the 2012 level. This growth in 2014 would follow 1.9
percent growth in 2013 and result in two years of substantial economic
growth for the North Carolina economy. The North Carolina economy is
expected to add 90,500 job in 2014, which should surpass the state’s
previous highest employment level, recorded in February of 2008.
2014 I 2014 II 2014 IV
4
3
2014 III
1
0
2
2014 Quarterly Growth Rates
in Forecasted Real GSP
3.6
2.9
3.1
2.9
2014 OUTLOOK
2014 GSP Highlights
Current Dollars
Total Gross Product
Constant (2000 Dollars)
Total Gross Product
Agricultural
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
TWU
Wholesale Trade
Retail Trade
Information
FIRE
B & P
E & H
H & L
Services
Government
485,548.5
406,324.4
3,225.8
137.0
13,358.4
80,610.5
38,832.0
41,778.5
13,754.0
20,194.3
24,388.0
14,430.7
85,146.0
47,097.5
30,829.2
12,738.3
8,190.8
52,223,9
2014 * Percent
Change
5.1
3.0
1.8
0.4
4.3
2.4
2.8
2.1
2.9
3.0
2.9
2.0
2.6
7.1
4.2
3.8
5.3
0.4
* millions of dollars
2014 Employment Highlights
Total Establishment
Employment
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
Wholesale Trade
Retail Trade
TWU
Information
FIRE
B&P Services
E&H Services
H&L Services
Other Services
Government
4,185.0
4.8
178.6
466.1
249.0
217.2
181.2
480.7
123.0
73.0
205.7
562.5
573.6
451.9
148.4
735.4
Year-End* Percent
Change
2.2
-7.2
4.1
3.8
3.5
4.1
2.8
3.1
0.4
0.7
0.2
1.7
1.5
3.0
2.7
1.5
*thousands of persons
7
7.5
8
8.5
9
9.5
10
10.5
11
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
NC Seasonally Adjusted
NC Seasonally Adjusted Forecast
US Seasonally Adjusted
2013 NORTH CAROLINA UNEMPLOYMENT RATE
FORECAST reports historical seasonally adjusted monthly unemployment rates for North Carolina and the United States and
forecasts the seasonally adjusted monthly unemployment rate for North Carolina. The seasonal adjustment accounts for variations in
labor market conditions that cause regular fluctuations in the unemployment level each month.
The graph at the top of this page provides a summary of the monthly unemployment rates for 2013. The solid green line represents
the North Carolina seasonally adjusted historic unemployment rate. The seasonally adjusted unemployment rate for the United
States is represented by the solid blue line. The North Carolina seasonally adjusted unemployment rate forecast is represented by the
solid yellow line. The seasonally adjusted rates for the United States and North Carolina can be compared directly and provide more
reliable estimates than the unadjusted rates.
The North Carolina seasonally adjusted unemployment rate began the year at 9.5 percent, while the United States rate was 7.9
percent. By April the North Carolina rate had fallen to 8.9 percent, while the United States rate had fallen to 7.5 percent. Both the
U.S. and North Carolina unemployment rates are expected to decline throughout 2013, and by December the North Carolina
unemployment rate is expected to be around 8.6 percent.

Babson Capital/UNC Charlotte
Economic Forecast
June 4, 2013
The data used in this report comes from the websites for the U.S. Department of Commerce's Bureau of Economic Analysis (www.bea.gov)
and the North Carolina Employment Security Commission (www.ncesc.com) as of April 30,2013. The opinions expressed in this Forecast by
Professor Connaughton (the Babson Capital Professor of Economics at the Belk College of Business) and UNC Charlotte do not necessarily
represent the views of Babson Capital Management LLC or its affiliates.
• For 2012, North Carolina real GSP decreased by 0.1 percent over the 2011
level.
• Eight of the state’s 15 economic sectors experienced modest output increases
during 2012. The sectors with the strongest growth were Business and
Professional Services with a real increase of 4.0 percent; Construction with a
real increase of 2.7 percent; Information with a real increase of 2.4 percent;
Mining with a real increase of 2.4 percent; and Transportation, Warehousing
and Utilities (TWU) with a real increase of 1.7 percent.
• For 2012, North Carolina establishments added 89,900 net additional jobs, an
increase of 2.2 percent.
• For 2013, North Carolina real GSP is forecast to increase by 1.9 percent over
the 2012 level.
• Thirteen of the state’s 15 economic sectors are forecast to experience output
increases during 2013. The sectors with the strongest expected growth are
Business and Professional Services with a projected real increase of 5.8 percent;
Mining with a projected real increase of 3.2 percent; Transportation,
Warehousing and Utilities (TWU) with a projected real increase of 3.1 percent;
and Other Services with a projected real increase of 3.0 percent.
• For 2013, North Carolina establishments are forecast to add 62,200 net
additional jobs, an increase of 1.5 percent.
• For 2014, North Carolina real GSP is forecast to increase by 3.0 percent over
the 2013 level.
• For 2014, North Carolina establishments are forecast to add 90,500 net
additional jobs, an increase of 2.2 percent.
GSP (Gross State Product) is a yardstick that
measures the total output of a state’s economy
for a given year. It is analogous to the U.S.
Gross Domestic Product (GDP).
9.4
8.6
10.5 9.8
Year-End Seasonally Adjusted North Carolina
Unemployment Rates
2010
2011 2012 2013f 2014f
2
4
6
8
10
12
14
8.4
1.9
Annual Growth Rates In Real GSP
-2
2010 2012 2013f 20142011 f
-1
0
1
2
3
3.0
2.2
-0.1
FORECAST HIGHLIGHTS
2.3
North Carolina Gross State Product (GSP) reached a level of $446,095.5
million in 2012. Real (inflation-adjusted) GSP decreased by 0.1 percent
over the 2011 level. This decline in 2012 followed very modest growth in
2011 and results in three years of slow growth since the recovery began.
For 2012, first quarter GSP increased at an annualized real rate of 1.2
percent. During the second quarter, GSP decreased at an annualized real
rate of 1.3 percent. In the third quarter, GSP rebounded and increased at an
annualized real rate of 1.2 percent. In the fourth quarter of 2012, GSP
picked up and recorded an annualized real growth rate of 1.9 percent.
While both the U.S. and state recoveries began in July of 2009, for North
Carolina it has been a weak recovery. For 2012, the U.S. economy
recorded slow real GDP growth of 2.2 percent and was able to avoid a
double-dip recession. However for North Carolina 2012 turned out to be
much weaker than the U.S. The good news is that the strongest growth
quarter was the fourth quarter of the year and this could lead to increased
growth in 2013.
Despite the weak GDP growth in 2012, the state was able to add a
respectable number of jobs during the year. The new benchmarked data
that came out in March indicated that the state added 89,900 jobs during
the year, the best job growth year since 2006 and the second best since
1998. By the end of 2012 the state had replaced 192,100 of the 334,600
jobs lost during the recession. That means that 57.4 percent of the total
jobs lost have been replaced over the last three years. Over the same period
the U.S. economy has replaced 61.6 percent of the 8,722,000 jobs lost.
Despite the job growth in 2012, North Carolina continues to have one of
the highest unemployment rates in the country.
2012 I 2012 II 2012 IVf
4
3
2012 III
1
0
2
Quarterly Growth Rates
in Real GSP
-1.3
1.9
1.2 1.2
2012 GSP
2012 Highlights
Current Dollars
Total Gross Product
Constant (2000 Dollars)
Total Gross Product
Agricultural
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
TWU
Wholesale Trade
Retail Trade
Information
FIRE
B & P
E & H
H & L
Services
Government
446,095.5
387,080.0
3,185.6
132.2
12,689.6
77,966.9
37,358.5
40,608.4
12,973.9
19,132.3
23,286.0
13,853.7
81,810.2
41,576.8
28,766.0
12,001.1
7,549.4
52,156.3
2012 * Percent
Change
1.4
-0.1
-10.3
2.4
2.7
-3.0
-2.3
-3.7
1.7
0.3
0.0
2.4
0.4
4.0
-0.1
1.6
-0.1
-1.2
* millions of dollars
The chart to the left presents the contributions of each major economic
sector to North Carolina’s Gross State Product (GSP). The real
(inflation-adjusted) growth rate for 2012 decreased by 0.1 percent. Real
growth rates for each sector (displayed in black type) are plotted on the
horizontal axis. Projected percentages of GSP contributed by each sector
(displayed in green type) are plotted on the vertical axis. The resulting
rectangles show the weighted importance of each sector’s growth during
2012. All of the sector information presented in the table to the left is
based on the new North American Industry Classification System
(NAICS) definitions.
Eight of the state’s 15 economic sectors experienced modest output
increases during 2012. The sectors with the strongest growth were
Business and Professional Services with a real increase of 4.0 percent;
Construction with a real increase of 2.7 percent; Information with a real
increase of 2.4 percent; Mining with a real increase of 2.4 percent;
Transportation, Warehousing and Utilities (TWU) with a real increase of
1.7 percent; Hospitality and Leisure Services with a real increase of 1.6
percent; Finance, Insurance, and Real Estate (FIRE) with a real increase
of 0.4 percent; and Wholesale Trade with a real increase of 0.3 percent.
Retail Trade output was flat in 2012.
Six sectors experienced output declines during 2012. These sectors were
Agriculture with a decline of 10.3 percent; Nondurable Goods
Manufacturing with a decline of 3.7 percent, Durable Goods
Manufacturing with a decline of 2.3 percent, Government with a decline
of 1.2 percent, Education and Health Services with a decline of 0.1
percent, and Other Services with a decline of 0.1 percent.
2012 GSP SECTOR ANALYSIS
Percent of Total Real GSP
Percent of Real Sector Growth
0.8
Nondurables -3.7
FIRE 0.4
2012 Total Real GSP Growth -0.1%
Agriculture -10.3
Retail Trade 0.0
Construction 2.7
Durables -2.3
TWU 1.7
Other Services -0.1
Wholesale Trade 0.3
0.0
3.4
9.7
10.5
3.3
4.9
6.0
3.1
13.5 Government -1.2
21.1
Information 2.4
B&P Services 4.0
E&H Services -0.1
H&L Services 1.6
10.7
7.4
2.0
3.6
Mining 2.4
North Carolina Gross State Product (GSP) is expected to reach a level of
$461,921.8 million in 2013. Real (inflation-adjusted) GSP is expected to
increase by 1.9 percent over the 2012 level. This growth in 2013 would
follow a modest decline in 2012 GSP and turn around a weak North
Carolina economy.
For 2013 first quarter GSP is expected to increase at an annualized real
rate of 1.7 percent. During the second quarter, GSP is expected to increase
at an annualized real rate of 2.7 percent. In the third quarter, GSP is
expected to record an annualized real growth rate of 2.5 percent. In the
fourth quarter of 2013, GSP is expected to grow at an annualized real rate
of 3.2 percent.
After a disappointing 2012, the state’s economy showed signs of life in the
fourth quarter. In addition, several recent factors suggest that 2013 could
be a breakout year for the North Carolina economy. First, we avoided
going over the “fiscal cliff” on January 1, 2013. While we did not avoid a
tax increase the impact was much less than had we gone over the cliff.
The compromise reached by the Congress and the President resulted in tax
increases on U.S. households of $160 billion in 2013 and sequestration
spending cuts of another $85 billion. This is about half the impact that
going over the cliff would have caused.
Second, and most important, for the first time in five years we are seeing
sustained increases in housing prices. The Case-Shiller Home Price Index
increased by 9.3 percent from February of 2012 to February 2013 for the
20 City Composite. Consistent increases in housing prices will change
consumer psychology toward home purchases and result in increased
demand over the next year. If residential construction picks up as expected
the second half of 2013 could be the first time this recovery actually feels
like a recovery.
2013 I 2013 II 2013 IV
4
3
2013 III
1
0
2
Quarterly Growth Rates
in Forecasted Real GSP
2.7 3.2
2.5
1.7
2013 GSP
2013 Highlights
Current Dollars
Total Gross Product
Constant (2000 Dollars)
Total Gross Product
Agricultural
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
TWU
Wholesale Trade
Retail Trade
Information
FIRE
B & P
E & H
H & L
Services
Government
461,921.8
394,307.3
3,170.2
136.4
12,809.3
78,717.7
37,786.2
40,931.5
13,372.7
19,599.1
23,710.6
14,145.3
83,020.5
43,971.7
29,582.2
12,286.0
7,775.1
52,028.4
2013 * Percent
Change
3.6
1.9
-0.5
3.2
0.9
1.0
1.1
0.8
3.1
2.4
1.8
2.1
1.5
5.8
2.8
2.2
3.0
-0.2
* millions of dollars
The chart to the left presents the projected contributions of each major
economic sector to North Carolina’s Gross State Product (GSP). The real
(inflation-adjusted) growth rate for 2013 is forecast to increase by 1.9
percent. Projected real growth rates for each sector (displayed in black
type) are plotted on the horizontal axis. Projected percentages of GSP
contributed by each sector (displayed in green type) are plotted on the
vertical axis. The resulting rectangles show the expected weighted
importance of each sector’s growth during 2013. All of the sector
information presented in the table to the left is based on the new North
American Industry Classification System (NAICS) definitions.
Thirteen of the state’s 15 economic sectors are forecast to experience
output increases during 2013. The sectors with the strongest expected
growth are Business and Professional Services with a projected real
increase of 5.8 percent; Mining with a projected real increase of 3.2
percent; Transportation, Warehousing and Utilities (TWU) with a
projected real increase of 3.1 percent; Other Services with a projected
real increase of 3.0 percent; Educational and Health Services with a
projected real increase of 2.8 percent; Wholesale Trade with a projected
real increase of 2.4 percent; Hospitality and Leisure Services with a
projected real increase of 2.2 percent; and Information with a projected
real increase of 2.1 percent.
Five sectors are also expected to record increases in 2013 at rates less
than the overall state growth of 1.9 percent. These sectors are Retail
Trade; Finance, Insurance and Real Estate (FIRE); Durable Goods
Manufacturing; Construction; and Nondurable Goods Manufacturing.
Two sectors – Government and Agriculture – are expected to decline in
2013.
2013 GSP SECTOR ANALYSIS
Percent of Total Real GSP
Percent of Real Sector Growth
0.8
Nondurables 0.8
FIRE 1.5
2013 Total Real GSP Growth 1.9%
Agriculture -0.5
Retail Trade 1.8
Construction 0.9
Durables 1.1
TWU 3.1
Other Services 3.0
Wholesale Trade 2.4
0.0
3.4
9.6
10.4
3.2
5.0
6.0
3.1
13.2 Government -0.2
21.1
Information 2.1
B&P
Services 5.8
E&H Services 2.8
H&L Services 2.2
11.2
7.5
2.0
3.6
Mining 3.2
Percent of Sector Employment Growth
Nondurables 1.8
FIRE 1.4
Retail Trade 3.2
Construction -2.0
Durables 2.3
Other Services 1.7
Wholesale
Trade 3.4
0.1
4.2
5.1
4.3
5.9
11.4
3.0
10.6
17.7
Government 0.5
5.1
Information 0.4
B&P Services 3.5
E&H Services 2.7
H&L Services 5.1
13.5
13.8
3.5
1.7
Mining -1.8
2012 Employment Highlights
Total Establishment
Employment
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
Wholesale Trade
Retail Trade
TWU
Information
FIRE
B&P Services
E&H Services
H&L Services
Other Services
Government
4,032.3
5.5
170,1
442.9
235.9
207.0
174.7
458.4
122.5
69.4
204.0
542.8
557.6
426.7
143.0
714.7
Year-End* Percent
Change
2.3
-1.8
-2.0
2.1
2.3
1.8
3.4
3.2
1.7
0.4
1.4
3.5
2.7
5.1
1.7
0.5
*thousands of persons
2012 EMPLOYMENT
SECTOR ANALYSIS
2012 Year-End Employment Trends
Percent of Total Employment
TWU 1.7
The sector employment analysis presented on this page is based on the
new North American Industrial Classification System (NAICS).
Seasonally adjusted nonagricultural employment in North Carolina
reached 4,032,300 persons by December 2012, an increase of 2.3
percent over the employment level in December 2011. The state gained
89,900 net jobs during the year.
Twelve of the state's 14 nonagricultural sectors of the economy
experienced employment increases during 2012. The sectors with the
strongest employment increases in 2012 were Hospitality and Leisure
Services at 5.1 percent; Business and Professional Services at 3.5
percent; and Wholesale Trade at 3.4 percent.
Percent of Sector Employment Growth
Nondurables 0.7
FIRE 0.7
Retail Trade 1.7
Construction 0.9
Durables 2.0
Other Services 1.1
Wholesale Trade 0.9
0.1
4.2
5.1
4.3
5.9
11.4
3.0
10.7
17.7
Government 1.3
5.0
Information 4.4
B&P Services 1.9
E&H Services 1.4
H&L Services 2.8
13.5
13.8
3.5
1.8
Mining -6.1
2013 Employment Highlights
Total Establishment
Employment
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
Wholesale Trade
Retail Trade
TWU
Information
FIRE
B&P Services
E&H Services
H&L Services
Other Services
Government
4,094.5
5.2
171.6
449.1
240.6
208.5
176.4
466.1
122.5
72.5
205.4
553.1
565.3
438.7
144.6
724.2
Year-End* Percent
Change
1.5
-6.1
0.9
1.4
2.0
0.7
0.9
1.7
0.0
4.4
0.7
1.9
1.4
2.8
1.1
1.3
*thousands of persons
2013 EMPLOYMENT
SECTOR ANALYSIS
2013 Year-End Employment Trends
Percent of Total Employment
TWU 0.0
The sector employment analysis presented on this page is based on the
new North American Industrial Classification System (NAICS).
Seasonally adjusted nonagricultural employment in North Carolina is
expected to reach 4,094,500 persons in December 2013, an increase of
1.5 percent over the employment level in December 2012. The state is
expected to gain 62,200 net jobs during the year.
Twelve of the state's 14 nonagricultural sectors of the economy are
expected to experience employment increases during 2013. The sectors
with the strongest employment increases in 2013 are Information at 4.4
percent; Hospitality and Leisure Services at 2.8 percent; and Business
and Professional Services at 1.9 percent.
Gross State Product (GSP) is expected to reach a level of 485,548.5
million in 2014. Real (inflation adjusted) GSP is expected to increase by
3.0 percent over the 2012 level. This growth in 2014 would follow 1.9
percent growth in 2013 and result in two years of substantial economic
growth for the North Carolina economy. The North Carolina economy is
expected to add 90,500 job in 2014, which should surpass the state’s
previous highest employment level, recorded in February of 2008.
2014 I 2014 II 2014 IV
4
3
2014 III
1
0
2
2014 Quarterly Growth Rates
in Forecasted Real GSP
3.6
2.9
3.1
2.9
2014 OUTLOOK
2014 GSP Highlights
Current Dollars
Total Gross Product
Constant (2000 Dollars)
Total Gross Product
Agricultural
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
TWU
Wholesale Trade
Retail Trade
Information
FIRE
B & P
E & H
H & L
Services
Government
485,548.5
406,324.4
3,225.8
137.0
13,358.4
80,610.5
38,832.0
41,778.5
13,754.0
20,194.3
24,388.0
14,430.7
85,146.0
47,097.5
30,829.2
12,738.3
8,190.8
52,223,9
2014 * Percent
Change
5.1
3.0
1.8
0.4
4.3
2.4
2.8
2.1
2.9
3.0
2.9
2.0
2.6
7.1
4.2
3.8
5.3
0.4
* millions of dollars
2014 Employment Highlights
Total Establishment
Employment
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
Wholesale Trade
Retail Trade
TWU
Information
FIRE
B&P Services
E&H Services
H&L Services
Other Services
Government
4,185.0
4.8
178.6
466.1
249.0
217.2
181.2
480.7
123.0
73.0
205.7
562.5
573.6
451.9
148.4
735.4
Year-End* Percent
Change
2.2
-7.2
4.1
3.8
3.5
4.1
2.8
3.1
0.4
0.7
0.2
1.7
1.5
3.0
2.7
1.5
*thousands of persons
7
7.5
8
8.5
9
9.5
10
10.5
11
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
NC Seasonally Adjusted
NC Seasonally Adjusted Forecast
US Seasonally Adjusted
2013 NORTH CAROLINA UNEMPLOYMENT RATE
FORECAST reports historical seasonally adjusted monthly unemployment rates for North Carolina and the United States and
forecasts the seasonally adjusted monthly unemployment rate for North Carolina. The seasonal adjustment accounts for variations in
labor market conditions that cause regular fluctuations in the unemployment level each month.
The graph at the top of this page provides a summary of the monthly unemployment rates for 2013. The solid green line represents
the North Carolina seasonally adjusted historic unemployment rate. The seasonally adjusted unemployment rate for the United
States is represented by the solid blue line. The North Carolina seasonally adjusted unemployment rate forecast is represented by the
solid yellow line. The seasonally adjusted rates for the United States and North Carolina can be compared directly and provide more
reliable estimates than the unadjusted rates.
The North Carolina seasonally adjusted unemployment rate began the year at 9.5 percent, while the United States rate was 7.9
percent. By April the North Carolina rate had fallen to 8.9 percent, while the United States rate had fallen to 7.5 percent. Both the
U.S. and North Carolina unemployment rates are expected to decline throughout 2013, and by December the North Carolina
unemployment rate is expected to be around 8.6 percent.